A well-oiled (er... oil well) tax system

As gas-electric hybrid vehicles are increasingly embraced by a society getting sick of rising fuel costs and the US government's apathy towards the environment, oil companies and government agencies are already churning their murky minds to circumvent the resulting loss of revenues. More miles to the gallon means less fuel sold. The oil companies lose, unless hybrid owners start driving more than before. Improved fuel efficiency also implies less income from the gas tax. The government loses.

The likes of Exxon-Mobil and Shell can easily re-calibrate their bottom lines by jacking up fuel costs. This they have done (as expected): after several months of artificial price-setting kept the cost per gallon of regular gas under $2.20 in my neighborhood, the end of the Congressional elections has seen a nearly 27 cent increase in double-quick time. How predictable, on so many levels!

So what can the government do about declining gas tax incomes? Tennessee lawmakers are showing the way by proposing a road use tax. Instead of paying a per-gallon tax at the pump, you get to pay for the miles you drive! In a trial of this latest swindle, a fleet of cars will be equipped with GPS units that track your driving distance between gas station visits. The units will communicate with the gas pump, deduct the gas tax from your bill, and tack on the use tax instead. These law-makers, whose salaries probably allow them to keep driving gas-guzzling behemoths without a second thought, are finding ways to annul the technological advances generated by foreign auto makers!

Here is a potential traffic impact from such a bizarre taxation policy. Currently, people largely choose routes based on perceived travel times, delays and facility-specific tolls. Traffic thus gets spread across multiple road facilities based on many days of driving experience and trade-offs between monetary tolls and travel time savings. If the taxes begin to depend on distance, people could start targetting the shortest distance (and not the shortest time) options. Distance is a concrete measure: there are no grey areas related to individual perceptions, and it certainly does not change from day to day. Together with fuel cost increases from the oil industry, the road use tax could make traffic worse!

Or maybe it won't. But I am sure that the possible side effects have not even been considered by Tennessee's rich law-makers.